What Is the Dow Jones?

The Dow Jones is a company that tracks financial information based on a collection of 30 U.S. stocks. It is often used as a barometer for the health of the markets. Consider using a variety of financial trackers to get a broad perspective of the market with advice from a financial planner in this free video on investments.

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Video Transcript

Hi there, I'm Cathy Pareto, the founder of Cathy Pareto & Associates, certified financial planner here in Miami, Florida. In this clip we're going to be talking a little bit about Dow Jones. Now let's clarify here, Dow Jones is actually a company that tracks financial information and actually publishes, at one points publishes the Wall Street Journal. But the Dow Jones that you might be thinking of as an investor is actually the index, the Dow Jones Industrial Average which you probably see every night on the nightly news, how did the Dow do today? The Dow Jones Index is really just a collection of 30, just 30, different stocks, US based stocks, things like Microsoft or Coca-Cola, Proctor & Gamble and that index changes periodically or reconstitutes. They'll put one company in and take another one out and it tracks basically it's just a barometer of the health of the markets. Now I'm not a big fan of using the Dow Jones as a barometer for the market because like I said, it only tracks 30 stocks in the whole country and there are thousands of stocks around the country. So just keep in mind that the Dow Jones is really just a very small barometer of the financial health of the markets and that there are other indexes that you could look at like the SNP or Wilshire 5000 that give you a much broader perspective of how the markets are doing. So that's a little bit about the Dow Jones Index and this has been Cathy Pareto from Miami, Florida.